How robust is the natalist bias of pollution control?

Alessia Cafferata () and Marwil Dávila-Fernández

Department of Economics University of Siena from Department of Economics, University of Siena

Abstract: This paper assesses the robustness of the so-called “natalist bias” of pollution control. The latter suggests that taxing emissions encourage agents to shift from production to tax-free activities such as procreation, further deteriorating the environment and gradually impoverishing the next generations. We relax the assumptions that human capital does not depend on environmental quality and that society does not allocate resources to pollution control. Using a similar Overlapping Generations (OLG) growth model, our findings indicate that taxation does not necessarily encourage agents to permanently shift away from production because living under better environmental conditions enhances productivity through human capital formation. As the government increases the emissions price, agents reduce consumption and education spending, hurting output in the short term. However, in the long run, the reduction in emissions that follows taxation more than compensates for the initial adverse effects, provided that the sensitivity of human capital accumulation to environmental degradation is strong enough. Furthermore, as we increase the coefficient capturing such pollution externality, a Neimark-Sacker bifurcation occurs, making the system compatible with persistent endogenous fluctuations

Keywords: Climate change; Natalist bias; OLG; Growth; Neimark-Sacker bifurcation (search for similar items in EconPapers)
JEL-codes: C62 O11 Q56 Q57 (search for similar items in EconPapers)
Date: 2023-01
New Economics Papers: this item is included in nep-dge, nep-ene and nep-env
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://repec.deps.unisi.it/quaderni/895.pdf (application/pdf)

Related works:
Journal Article: How robust is the natalist bias of pollution control? (2024)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:usi:wpaper:895

Access Statistics for this paper

More papers in Department of Economics University of Siena from Department of Economics, University of Siena Contact information at EDIRC.
Bibliographic data for series maintained by Fabrizio Becatti ().